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Exam 45: Consumer Law

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Question 21

Multiple Choice

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Which of the following authorities would have presided over the hearing involving the administrative complaint filed against Julia by the Federal Trade Commission?

A) A state circuit court judge
B) A federal district court judge
C) An administrative law judge
D) A panel of commissioners of the Federal Trade Commission
E) All the commissioners of the Federal Trade Commission

F) A) and E)
G) B) and C)

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Question 22

Multiple Choice

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Which of the following does not fall under the regulations of the Food and Drug Administration?

A) meat and chicken
B) cosmetics
C) medical devices
D) drugs
E) water quality

F) C) and E)
G) A) and B)

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Question 23

Multiple Choice

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What does the Flammable Fabrics Act of 1953 prohibit?

The cease-and-desist order entered by the Federal Trade Commission, involving Oscar's sales of Wind and his sales of all other vehicles, is known by which of the following terms?

[The Funeral Outlet] Owen operates a funeral home called Owen's Funeral Outlet. Owen likes to keep things simple. He generally has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Owen also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which there has been a recent death because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Owen also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. Sometimes, Owen varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. After many consumer complaints, the Federal Trade Commission and other federal agencies investigate Owen. He hires a good lawyer with his profits in an attempt to stay out of trouble. -If most companies within one industry are using the same unfair or deceptive practices, how can the Federal Trade Commission protect consumers?

Which of the following is not a federal law regulating product labeling?

Under the Equal Credit Opportunity Act, creditors may not deny credit on the basis of whether the applicant receives public assistance benefits.

[The Funeral Outlet] Owen operates a funeral home called Owen's Funeral Outlet. Owen likes to keep things simple. He generally has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Owen also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which there has been a recent death because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Owen also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. Sometimes, Owen varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. After many consumer complaints, the Federal Trade Commission and other federal agencies investigate Owen. He hires a good lawyer with his profits in an attempt to stay out of trouble. -Regarding Owen's practice of requiring a complete package purchase from him if the consumer desires any funeral services, which of the following statements is true?

Which of the following is false regarding the Consumer Product Safety Act?

If your credit card is stolen and unauthorized purchases are made on your account, you are liable for all losses if it is proved you were careless in losing the credit card.

Which of the following is NOT a way in which the Consumer Product Safety Act protects consumers?

[Convertibles] Oscar, a new car dealer, advertised that a new brand of convertible called Wind would be available at his dealership for the price of $10,000 each. He had only three Wind vehicles, however; and when those were sold, he tried to convince shoppers to purchase a much more expensive new convertible at a price of $25,000. Rosa, a customer who decided to purchase one of the more expensive vehicles, needed financing in order to do so. She had $10,000 to pay on the car and sought a loan from XYZ Bank for the remainder. She wanted the loan for a specific amount of time. XYZ Bank offered her the loan and she agreed. The only information she received from XYZ Bank was confirmation that she borrowed $15,000 at an 8 percent interest rate. After receiving several complaints, the Federal Trade Commission disapproved of Oscar's action in regard to the Wind vehicles. After appropriate proceedings, the Commission proceeded to issue a cease-and-desist order involving Oscar's misleading advertisement in regard to Wind vehicles and also in regard to any other vehicles he offered for sale. -What type of loan was Rosa seeking from XYZ Bank?

________ is the use of generalities and clear exaggerations.

Commissioners for the FTC serve ________ year terms.

Alayna markets a bell that she claims will automatically quiet a crying baby. Alayna advertises on television that the bell has a certain tone that babies love and shows a baby suddenly stop crying when the bell is rung. She charges $50 for each bell for which she incurs $1 in manufacturing charges. The bell was very popular for a few months, but she has started to get complaints; and the Federal Trade Commission has investigated her advertisement regarding the bell. Alayna claims that her advertisement is not deceptive. The Federal Trade Commission, however, claims that her advertisement satisfies the three elements necessary for a deceptive claim. What are those three elements?

Which of the following conducts investigations into the safety of motor vehicles?

[The Funeral Outlet] Owen operates a funeral home called Owen's Funeral Outlet. Owen likes to keep things simple. He generally has one flat price with no itemization and requires that customers purchase a complete package from him if they want any services whatsoever. Owen also goes door-to-door selling funeral packages. He tries to visit neighborhoods in which there has been a recent death because residents in the neighborhood will have final arrangements on their minds. He believes and informs customers that once customers sign a contract for burial services, there is no backing out. Owen also obtains a good deal of business from phone solicitation. He enjoys calling late at night, between 10 p.m. and 11 p.m., when people are tired, but before they go to bed. He believes that if people do not feel well, they are more likely to consider funeral arrangements. Sometimes, Owen varies his sales tactic and tells consumers he talks to on the phone aspects of the total cost in small increments, not mentioning the total price, believing that if they are tired, they are less likely to ask too many questions. After many consumer complaints, the Federal Trade Commission and other federal agencies investigate Owen. He hires a good lawyer with his profits in an attempt to stay out of trouble. -What rights of appeal does a company have if issued a cease-and-desist order by the Federal Trade Commission?

Billy's Widgets has been accused of deceptive advertising. He disagrees with the accusations but just wants the FTC to leave him alone so he can move on and keep running his business. How might he resolve the pending FTC action against him in a timely manner?

If a judge determines that a business violated the law and the FTC issues a cease and desist order, does the business have any recourse against the cease and desist order?

A telemarketer calls a consumer and fails to identify the call as a sales call. What law or regulation did the telemarketer violate?